Question 1

Which of the following illustrates double counting?

Accepted Answer

A) The total market value of the steel used to produce a car and the total market value of the car itself are summed. 
B) The total market value of tennis rackets and the total market value of tennis balls are summed. 
C) The total market value of picture frames and the total market value of camera film are summed. 
D) The total market value of eyeglasses and the total market value of carpet are summed. 
E) b and c 
A) The total market value of the steel used to produce a car and the total market value of the car itself are summed. 
B) The total market value of tennis rackets and the total market value of tennis balls are summed. 
C) The total market value of picture frames and the total market value of camera film are summed. 
D) The total market value of eyeglasses and the total market value of carpet are summed. 
E) b and c A

Question 2

In the business cycle,what is the difference between the recovery phase and the expansion phase?

Accepted Answer

A) The expansion phase occurs in the rising portion of the business cycle,while the recovery phase occurs in the falling portion of the business cycle. 
B) The expansion phase occurs in the falling portion of the business cycle,while the recovery phase occurs in the rising portion of the business cycle. 
C) The expansion phase is the period when Real GDP increases beyond the recovery phase. 
D) The expansion phase must always come before the recovery phase. 
A) The expansion phase occurs in the rising portion of the business cycle,while the recovery phase occurs in the falling portion of the business cycle. 
B) The expansion phase occurs in the falling portion of the business cycle,while the recovery phase occurs in the rising portion of the business cycle. 
C) The expansion phase is the period when Real GDP increases beyond the recovery phase. 
D) The expansion phase must always come before the recovery phase. C

Question 3

Some economists argue that GDP overstates overall economic welfare because it does not include the impact of bads such as pollution.

Accepted Answer

A) True 
 B)False  True

Question 4

Which of the following is a macroeconomic measurement used to gauge macroeconomic activity?

Accepted Answer

A) Net domestic product 
B) National income 
C) Personal income 
D) Disposable income 
E) all of the above 
A) Net domestic product 
B) National income 
C) Personal income 
D) Disposable income 
E) all of the above

Question 5

Which of the following is counted in GDP?

Accepted Answer

A) the trading of 100 shares of Microsoft stock 
B) the services of a real estate broker 
C) government transfer payments 
D) the sale of a used car 
E) none of the above 
A) the trading of 100 shares of Microsoft stock 
B) the services of a real estate broker 
C) government transfer payments 
D) the sale of a used car 
E) none of the above

Question 6

Which of the following would definitely not be included in the measurement of GDP?

Accepted Answer

A) value of the services of a painter who paints your garage 
B) value of the services of a person who mows his or her own lawn 
C) value of the services of a maid who cleans your house 
D) value of the services of a plumber who fixes your kitchen sink 
A) value of the services of a painter who paints your garage 
B) value of the services of a person who mows his or her own lawn 
C) value of the services of a maid who cleans your house 
D) value of the services of a plumber who fixes your kitchen sink

Question 7

Personal income is

Accepted Answer

A) equal to GDP. 
B) that portion of national income that can be used for consumption and saving. 
C) the sum of all payments to suppliers of the factors of production. 
D) the amount of income that individuals actually receive. 
E) another term for disposable income. 
A) equal to GDP. 
B) that portion of national income that can be used for consumption and saving. 
C) the sum of all payments to suppliers of the factors of production. 
D) the amount of income that individuals actually receive. 
E) another term for disposable income.

Question 8

If a business firm in Country A produces a good but does not sell it in that same year,that good will not be counted in Country A's GDP.

Accepted Answer

A) True 
 B)False

Question 9

Suppose that consumption spending is $4,200 billion,spending on durable goods is $1,200 billion,and spending on services is $2,000 billion.What does spending on nondurable goods equal?

Accepted Answer

A) $7,200 billion 
B) $1,000 billion 
C) $2,200 billion 
D) $3,200 billion 
E) There is not enough information to answer this question. 
A) $7,200 billion 
B) $1,000 billion 
C) $2,200 billion 
D) $3,200 billion 
E) There is not enough information to answer this question.

Question 10

In which phase of the business cycle does a recession occur?

Accepted Answer

A) contraction 
B) peak 
C) recovery 
D) expansion 
A) contraction 
B) peak 
C) recovery 
D) expansion

Question 11

Corporate profits is the largest category of national income.

Accepted Answer

A) True 
 B)False

Question 12

"Economic growth" has occurred if

Accepted Answer

A) inflation rate between this year and last year is zero or less. 
B) GDP this year exceeds the Real GDP this year. 
C) unemployment rate this year is above the natural rate of unemployment. 
D) Real GDP this year is greater than Real GDP last year. 
A) inflation rate between this year and last year is zero or less. 
B) GDP this year exceeds the Real GDP this year. 
C) unemployment rate this year is above the natural rate of unemployment. 
D) Real GDP this year is greater than Real GDP last year.

Question 13

Which of the following statements is true?

Accepted Answer

A) Another name for capital consumption allowance is depreciation. 
B) When there are two consecutive quarterly declines in Real GDP the economy is said to be in recession (based on the standard definition). 
C) In the expansion phase of a business cycle,Real GDP rises beyond the recovery. 
D) a and b 
E) a,b,and c 
A) Another name for capital consumption allowance is depreciation. 
B) When there are two consecutive quarterly declines in Real GDP the economy is said to be in recession (based on the standard definition). 
C) In the expansion phase of a business cycle,Real GDP rises beyond the recovery. 
D) a and b 
E) a,b,and c

Question 14

The sum of durable goods,nondurable goods,and services equals

Accepted Answer

A) investment. 
B) fixed investment. 
C) government purchases. 
D) consumption. 
E) net exports. 
A) investment. 
B) fixed investment. 
C) government purchases. 
D) consumption. 
E) net exports.

Question 15

Increases in import spending _____________________,ceteris paribus.

Accepted Answer

A) raise GDP 
B) lower GDP 
C) are always equal to decreases in exports 
D) may raise or lower GDP 
A) raise GDP 
B) lower GDP 
C) are always equal to decreases in exports 
D) may raise or lower GDP

Question 16

Suppose that nondurable goods spending is $200 billion,durable goods spending is $400 billion,new residential housing spending is $500 billion,and spending on services is $700 billion.What does consumption equal?

Accepted Answer

A) $600 billion 
B) $1,100 billion 
C) $1,800 billion 
D) $1,300 billion 
E) There is not enough information to answer this question. 
A) $600 billion 
B) $1,100 billion 
C) $1,800 billion 
D) $1,300 billion 
E) There is not enough information to answer this question.

Question 17

Which of the following statements is true?

Accepted Answer

A) Government purchases is the largest component of GDP. 
B) Net exports are equal to exports plus imports. 
C) U.S.imports refer to the physical quantity of foreign-produced goods that are purchased by residents of the United States. 
D) Government purchases includes the spending on goods and services by all levels of government (federal,state,and local). 
E) c and d 
A) Government purchases is the largest component of GDP. 
B) Net exports are equal to exports plus imports. 
C) U.S.imports refer to the physical quantity of foreign-produced goods that are purchased by residents of the United States. 
D) Government purchases includes the spending on goods and services by all levels of government (federal,state,and local). 
E) c and d

Question 18

Investment equals inventory investment added to

Accepted Answer

A) business purchases of new capital goods. 
B) purchases of new residential housing. 
C) fixed investment. 
D) business purchases of new capital goods and purchases of new residential housing. 
E) either c or d 
A) business purchases of new capital goods. 
B) purchases of new residential housing. 
C) fixed investment. 
D) business purchases of new capital goods and purchases of new residential housing. 
E) either c or d

Question 19

Look at the following data: durable goods = $200 billion;nondurable goods = $350 billion;services = $600 billion;fixed investment + inventory investment = $200 billion;government purchases = $400 billion;exports = $30 billion;imports = $79 billion.GDP is equal to

Accepted Answer

A) $1,701 billion. 
B) $1,201 billion. 
C) $1,859 billion. 
D) $1,010 billion. 
E) There is not enough information to answer the question. 
A) $1,701 billion. 
B) $1,201 billion. 
C) $1,859 billion. 
D) $1,010 billion. 
E) There is not enough information to answer the question.

Question 20

Describe the three different reasons that investment can rise.Explain how one of these three changes could be undesireable in terms of promoting the economic health and strength of the economy.

Accepted Answer

Investment can rise as a result of: (1)a

Exam 7: Macroeconomic Measurements, part II: GDP and Real GDP

Which of the following illustrates double counting?

In the business cycle,what is the difference between the recovery phase and the expansion phase?

Some economists argue that GDP overstates overall economic welfare because it does not include the impact of bads such as pollution.

Which of the following is a macroeconomic measurement used to gauge macroeconomic activity?

Which of the following is counted in GDP?

Which of the following would definitely not be included in the measurement of GDP?

Personal income is

If a business firm in Country A produces a good but does not sell it in that same year,that good will not be counted in Country A's GDP.

Suppose that consumption spending is $4,200 billion,spending on durable goods is $1,200 billion,and spending on services is $2,000 billion.What does spending on nondurable goods equal?

In which phase of the business cycle does a recession occur?

Corporate profits is the largest category of national income.

"Economic growth" has occurred if

Which of the following statements is true?

The sum of durable goods,nondurable goods,and services equals

Increases in import spending _____________________,ceteris paribus.

Suppose that nondurable goods spending is $200 billion,durable goods spending is $400 billion,new residential housing spending is $500 billion,and spending on services is $700 billion.What does consumption equal?

Which of the following statements is true?

Investment equals inventory investment added to

Look at the following data: durable goods = $200 billion;nondurable goods = $350 billion;services = $600 billion;fixed investment + inventory investment = $200 billion;government purchases = $400 billion;exports = $30 billion;imports = $79 billion.GDP is equal to

Describe the three different reasons that investment can rise.Explain how one of these three changes could be undesireable in terms of promoting the economic health and strength of the economy.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, controlled, and Relative

Supply,demand,and Price: Applications

Macroeconomic Measurements, part I: Prices and Unemployment

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self-Regulating Economy

Keynesian Macroeconomics and Economic Instability: a Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money,banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, technology, ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case for and Against Government: Five Topics Considered

Stocks, bonds, futures, and Options

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